Professional Documents
Culture Documents
AND
PERSONAL
PROPERTY
LAW
THE CONCEPT
OF PROPERTY
OUTLINE
1. The concept of property
2. Traditional classification of property
3. The nature of personal property
4. The indicia of property rights
5. The bundle of rights concept
6. The importance of identifying property
Property refers to the legal relationship we have with a thing; it refers to a degree of
power that is recognised in law, as power permissibly exercised over the thing
Our focus is not on the thing itself, but on our rights to it, and remedies that flow
from those rights
If the facts required to prove a particular form of property can be established, the
holder of that property may be able to convince a third person of his or her superior
legal position by asserting and documenting that claim
Failure to do so will require the contending parties to seek judicial resolution as to
who is the true owner, and, if necessary coercion by the state to enforce the rights of
the true owner
Thus, the property relationship can only exist if there are rights in relation to an
object or thing, and society or the state is prepared to enforce those rights by granting
remedies
Some examples of property rights
o Chattels or goods: person in possession has property; rights arise from CL
and statute e.g., Sale of Goods Act 1896 (Qld) and the Australian Consumer
Law in the Competition and Consumer Act 2010 (Cth)
o Books: person in possession has property, but the author is the owner of the
copyright in the work and can prevent unauthorised copying of the work
pursuant to the Copyright Act 1968 (Cth)
TYPES OF PROPERTY
Our next topic is the different species of property that are recognised by Australian
legal system
2 main branches:
o real property (land and interests in land)
o personal property (goods/ chattels)
o Personal rights:
PERSONALTY
Chattels personal: two types comprises any property other than real property or
chattels real
o Chose in possession: tangible chattel goods(eg car)
GOODS
Judicial authority for this approach - Blackburn J in Milirrpum v Nabalco Pty Ltd
o I think that property in its many forms generally implies the right to use or
enjoy, the right to exclude others, and the right to alienate. I do not say that
all these rights must co-exist before there can be a proprietary interest or deny
that each of them may be subject to qualification.
BUNDLE OF RIGHTS
In conclusion, identifying the type of property will determine the property owners
rights in relation to that thing
We can work out who has property in an object and thus what they're entitled to do
with it.
Once we know what their rights are, can work out what remedial action that person is
entitled to take against others if their property rights are violated.
FIXTURES AND
CHATTELS
OUTLINE
1. What is a fixture?
2. How do you determine when a chattel becomes a fixture?
3. What constitutes annexation?
4. What role does intention play?
5. Are there any other relevant considerations?
Temporary? Chattel
Permanent? Fixture
OTHER CONSIDERATIONS
Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning Pty Ltd where D supplied
and installed air conditioning plant to roof of Ps building; plant was placed on
platform and affixed by its weight on pads which acted as shock absorbers between
legs of plant and platform and connected to buildings water system with flanijures
and bolts; water pipes connected to water pump which was secured to a platform; D
removed air condition after not being paid for installation; P who owned building
sought injunction claiming air conditioning was fixture; Court considered nature,
positioning and connection of plant and how it formed an essential part of the
building; held that plant annexed to building to form fixture (determined by degree
and purpose of annexation) and intention could be inferred
Commissioner of State Revenue v Snowy Hydro Ltd where 6 electricity generators
in modules resting on concrete foundations, modules in a steel frame bolted to the
foundation; generators removal, mobile and transportable; held to be fixtures - clear
intention was not for temporary purpose, but for a permanent power station; units
were bolted down so the entire site could function safely
OWNERSHIP
AND
TRANSFER OF
OWNERSHIP
1.0 OWNERSHIP?
Ownership: the legal relationship between a person and an object - the greatest
bundle of rights that can exist in relation to property at law
Distinguish from possession: a person can own without possessing, and possess
without owning
Title refers to the owners ability to resist the competing claims of others to a thing.
Interest refers the bundle of rights the owner enjoys in relation to the object eg to
alienate, to use, to possess, to enjoy the benefits and income
Accession: the attachment of a minor chattel to a dominant chattel where the identity
of the principal chattel is not changed. The owner of the dominant chattel becomes the
owner of the principal object which now includes the accessory chattel.
The owner of the subservient chattel may have remedies eg damages
Injurious removal test: One chattel is added to or accedes to another chattel in
circumstances where the accessory cannot be removed from the principal without the
destruction of, or serious injury to, the chattel as a whole
Intention: Generally, ownership in a chattel can only pass if the owner intends;
however, the effect of the doctrine of accession is that ownership of the accessory is
transferred to the owner of the dominant chattel where the necessity of the case
requires it
o 2 issues can arise:
The necessity of the case
Which is the principal chattel and which is the accessory
chattel?
Property in a chattel can be deemed to have passed by operation of law where the
necessity of the case requires that to occur
As a matter of practicability, the accessory chattel cannot be identified or, if identified,
it has been incorporated to such an extent that it cannot be detached from the principal
object: Rendell v Associated Finance Pty Ltd where Pell hired engine from R and
truck from AF under HP agreements. P installed the engine in the truck; Clause:
accessories attached to the truck become part of the truck; issue over who owned the
engine; held that Rendell owned it, because it could be readily detached from the
truck
Apply McKeown v Cavalier Yachts Pty Ltd where plaintiff supplied hull worth $ 1
777; Defendant did work worth $24 409 he claimed it on the ground that he had not
been paid and that the work involved was worth much more than the value of the hull
supplied by the plaintiff; held (1)The plaintiff was the owner of the yacht and was
entitled to its return. The doctrine of accession applied to the work done on the hull
which was the principal chattel; (2) However, the second defendant was entitled to
be compensated for the improvements
the mixing together of goods, which belong to two or more people in such a way as to
produce an inextricable mixture which results in common ownership of the resultant
mass or bulk
Importantly, does not involve a change in the physical or chemical state of the mixed
or merger things
Agreement: Where commingling has been agreed, then as agreed or as tenants in
common in proportion to their contributions
No agreement:
o Accidental mixing
If contribution can be determined: each party takes as tenant in
common in proportion to his/her contribution Coleman v Harvey
If cannot be determined: each party takes as tenants in common in
equal shares: Buckley v Gross
Deliberate mixing
o The resultant mixture is owned as tenants in common
o The innocent party receives back their contribution with any doubt as to
quantity being resolved in favour of the innocent party.
o If the innocent party suffers loss by the mixing, it is entitled to claim
damages from the mixing party.
Indian Oil Corporation v Greenstone Shipping SA (Panama) where
deliberate mixing of buyers oil with residue on ship; mixture of oils could
not be separated; the buyer claimed the oil, but failed; the buyer was
entitled only to the oil it had contributed (bought)
Specification is the process under which one product is transformed into a different
state by the application of some physical, mechanical or chemical process
Who owns the product: depends on whether the transformation into the different
product was lawfully done
If the specification is done lawfully, the derived product will belong to the maker:
Associated Alloys Pty Ltd v Metropolitan Engineering and Fabrications Pty Ltd
where sellers steel made into a new product by the buyer; buyer in liquidation;
Romalpa clause (retention of title) - title to the goods does not pass to the buyer until
it has paid the purchase price of the goods;
o Associated Alloys applied the general principle: Where As material is
lawfully used by B to create new goods, whether or not B incorporates new
material of his own, the property in the new goods will vest in B: Clough
Mill Ltd v Martin
If specifically done unlawfully, the derived product will belong to the owner of the
original material: Silsbury v McCooon where stolen corn was used to make whiskey;
specifically done unlawfully by non-innocent wrongdoer; new product belonged to
owner of original material who was entitled to the new product or to its improved
value in an action for damages
SUMMARY
Assignment: the immediate transfer of an existing proprietary right from the assignor
to the assignee
Legal assignment must be in accordance with - s199 Property Law Act 1974 (Qld):
Assignment must be in writing under the hand of the assignor
Assignment must be absolute and not purport to be by way of charge (e.g.
must give the assignee sole right to the debt as against the debtor)
Notice in writing must be given to the debtor, trustee or other person from
whom the assignor would have been entitled to claim the debt or thing in
action
Consideration is not necessary
Gift: a gratuitous transfer of the ownership of property from one person (the donor) to
another person (the donee) with the full intention that the thing should not be returned
to the donor
Elements:
o (i) Delivery of possession;
o (ii) Intention of the donor to transfer the property right to the done
o (iii) Intention of the donee to accept the transfer
o (iv) No valuable consideration
intention must be to give the donee the absolute right to the exclusive enjoyment of
the chattel
donor must communicate that intention to the donee
POSSESSION
AND REMEDIES
FOR
INTERFERENCE
WITH
POSSESSION
OUTLINE
1.0
POSSESSION
Topics considered:
o Possession vs Ownership
o The relevance of possession
Confers rights enforceable at law
Confers a possessory title
Prima facie evidence of ownership
Remedies founded on possession
Title (ownership) may pass without possession passing
Elements of possession
o No exhaustive definition which suits all contexts
o The meaning always depends on the context
o A relationship in fact between a person and some material object
o Elements:
Control
Intention to possess
State of being a possessor in the eye of the law; coexists with the fact of physical
control, making the exercise of that control rightful
Need not have lawful origin
o So even one who has proceeds from drug money will have legal possession
Example: Pollock and Wright, An Essay on Possession in the Common Law (1888)
o Tailor sends coat to JS: JS has legal possession once he accepts delivery
o Servant takes coat back to tailor for alterations: servant has custody;
o Z robs servant: Z has complete control over the coat and legal possession, but
wrongful possession
o JS is able to defeat Zs claim by proof of a superior title
More than one type of possession may exist at the same time: not mutually exclusive
2.1 DELIVERY?
2.2 ABANDONMENT?
2.3FINDING?
A person in possession of an object has rights even where the person is not the true
owner: Armory v Delamirie
o finder does not acquire absolute property, but can keep it against all but the
rightful owner
o Usually a dispute between the finder, the occupier of land, and the owner of
the land
o Principles vary according to circumstances of the finding
Rights acquired are possessory, not ownership
Right is to keep it against all but true owner
Where goods are attached to the land: Elwes v Briggs Gas Co where dispute between
owner of land (lessor) and occupier (lessee); held owner had better claim
Where goods are not attached to the land, occupier has better claim but only if
occupier manifests an intention to exercise control over the building; if no intention
to exercise control over the building, finder has better claim: Parker v British
Airways Board where dispute between occupier and finder; Parker waiting as
passenger in executive lounge of terminal 1 in London airport and found a
gentlemans gold bracelet on the floor lost by its rightful owner; delivered it to
employee and orally requested that in the event of it not being claimed that it should
be returned to him; bracelet never claimed but despite request the Board subsequently
sold it; issued proceedings; held that Board could not assert rights because they did
not manifest intention to control the lounge and all things in it
3.1TRESPASS TO GOODS
3 a voluntary act which involves the direct and unauthorised interference with the
possessors actual possession of a chattel: Penfolds Wines Pty Ltd v Elliott where
Penfolds made and sold wine in bottles; retained ownership of bottles embossed with its
name; hotelkeeper sold bulk wine to customers who provided bottles in which to carry it
away; hotelkeeper filled bottles; Penfolds applied for injunction to restrain alleged
trespass to goods; held no trespass as Elliot was in possession of the bottles
o Title to sue: actual possession or an immediate right to possession, depending
on the circumstances
o Remedy: damages for the injury done to the chattel
3.2CONVERSION
4
Elements of conversion:
o Defendants conduct inconsistent with rights of owner
o Intention: conduct was deliberate not accidental
o Conduct was so extensive an encroachment of the proprietary rights of the
owner as to exclude him/her from use and possession of the goods
Penfolds
3.3 DETINUE
Special action on the case - action for an owner who is not in actual possession and has
no right to immediate possession: Penfolds Wines
3.1 Does not depend on the Ps immediate right to possession
3.2 Permanent damage to chattel must have occurred
BAILMENT
TOPICS
Definition of bailment
Subsidiary bailments
Duties of bailor
Duties of bailee
A bailment comes into existence upon a delivery of goods of one person, the bailor, into the
possession of another person, the bailee, upon a promise, express or implied, that they will be
re-delivered to the bailor or dealt with in a stipulated way. Hobbs v Petersham Transport
Co Pty Ltd
Bailment can occur only in relation to choses in possession (tangible chattels), not choses in
action or real property
One person (the bailee) takes possession of goods of another (the bailor) voluntarily and
knowingly
It is the separation of ownership and possession that is critical there can be no bailment
unless one person is in possession of goods which belong to another
Bailment can be created without the knowledge or consent of the bailor eg bailment by
finding
Most bailments occur with the knowledge and consent of the bailor pursuant to contract:
8.1
8.2
8.3
8.4
8.5
Bailments involve some degree of delivery and possession (actual or constructive) being
transferred by bailor to bailee: no transfer of possession, no bailment
If bailment for a term, a bailors right to possession is suspended for the duration of
the bailment and bailee has possession (including right to possession)
parties
Role of bailee:
Bailee does not represent bailor just exercises powers over bailors
property
Role of agent:
Licence:
when a seller of goods remains in possession after property has passed to the
buyer (seller is the bailee and the buyer is the bailor) or
when a seller delivers goods to the buyer but stipulates that the property shall
remain with the seller until payment (seller is the bailor and the buyer is the bailee) a
retention of title or Romalpa clause
Chapman Bros v Verco Bros where farmers delivered wheat to wheat merchants;
merchants stacked wheat with other wheat which not marked; impossible to identify and
restore to individual farmers exact bags; K held that on request by farmer, merchants
would pay for wheat or return equal quantity, but not required to return identical wheat;
held not to be a bailment, but a sale
4.0 SUB-BAILMENT
A subsidiary bailment occurs when: a person who is not the owner of goods, but who
retains a present right to possession as bailee, transfers possession of those goods to a third
party, the sub-bailee
Bailor may bring an action against the sub-bailee and is not required to rely on any
contract between the bailee and the sub-bailee
Sub-bailee is answerable both to the head bailor and to the bailee for any breach of the
sub-bailees common law obligations: The Pioneer Container
Bailee remains liable to the bailor for any default of the sub-bailee
In an action by an owner against a sub-bailee for loss of the goods, the sub-bailee can
only rely on the terms of the contract between the bailee and the sub-bailee if the owner has
expressly or impliedly consented to the bailee making a subsidiary bailment on those terms,
but not otherwise: The Pioneer Container where carriage of goods by sea; consent to
subsidiary bailment on any terms was sufficient consent to the sub-bailees terms
See also Morris v CW Martin & Sons Ltd where P sent her mink stole to drycleaner
for cleaning; dry cleaner explained they did not provide that service, and with Ps consent
forwarded the mink stole to their furriers; furriers employee stole the mink stole; held that
sub-bailee, the employee, was liable to P irrespective of no K between them and P; D
breached their duty to take reasonable care and to not covert bailed goods; bailor was
bound by conditions (exemption clause) if they had expressly or impliedly consented to the
bailee making a subsidiary bailment containing those conditions, but not otherwise; while
P impliedly consented to terms usually in the current trade, exemption clause did not apply
because exempted loss occurred during processing, whereas what the furrier did was not
during, but before
Where a stranger commits a tort against bailed goods, the bailee can recover from the
tortfeasor the full value of the goods, or the full cost of their repair or diminution in value, as
if they were the bailees own property
In a bailment the common law equates possession and title
A bailee must make a proper division of the proceeds with the bailor after recovering
in full from the third party
Recovery by the bailee relieves the third party from liability to the bailor
The Winkfield where mail posted in South Africa and on route to Southampton in England on
a ship called the Mexican, which sank after a collision with the Winkfield; owners of
the Winkfield admitted liability; it was assumed for the purposes of the case that plaintiff
Postmaster-General was the bailee of the mail, constructive possession even though custody
resided in the owners of the ship on which it was being carried; plaintiff sued to recover a
proportion of the loss from the Winkfields owners; Court of Appeal held owners of the
negligent ship were liable in full for the value of the mail; in an action against a third party
for loss caused by the third partys negligence, the bailee in possession can recover the value
of the goods; possession constitutes title against a wrongdoer; wrongdoer cannot defend
himself by showing that there is title in some third person (bailor); bailee has a liability to
account to the bailor
Rule also applies to gratuitous bailees as well as to bailees for mutual advantage:
Millar v Candy
Where the bailment is for a fixed term, bailor has a duty not interfere with bailees
possession until the expiry of the term
Traditionally:
Modern English approach: one duty of care upon all categories of bailees: will
be liable for failure to exercise reasonable care
High Court is yet to consider the matter
Duty of care
A bailee for reward is not an insurer does not have to take every conceivable
precaution and is not liable for every loss
Has a duty to take reasonable care in the circumstances (modern English
approach)
Onus rests with the bailee to show he or she took reasonable care in the
circumstances
Normal onus of proof in law of tort (negligence): Pl must prove a breach of duty of
care that caused Ps loss
In relation to a bailees duty to take care of the bailed goods, in the event of loss or
damage to the bailed goods the onus of proof rests with the bailee (reversal of normal onus)
Rationale:
See Pitt Son & Badgery Ltd v Proulefco SA where a wool broker retained in
a wooden shed, wool it had sold to another; the wool was destroyed by a
fire started by a young drifter, who put lit paper in a crack in the shed
wall; the shed was nearly 40 years old, in dry condition and surrounded by
an ineffective wooden fence, parts of which had been removed for
firewood; although adequately locked and equipped with 12 fire
extinguishers, the shed was unattended at night and there was no
floodlighting or overnight watch and the area was non-residential; the
lessees of the shed conceded that they were bailees for reward but
denied fault; held: the broker had failed to take reasonable care
Jackson v Cochrane where owner delivered caravan to bailee motor dealer for sale
on consignment (sale or return); bailee induced by fraudulent misrepresentation to deliver it
to three strangers who said they had the owners authority (misdelivery); held: bailee was
liable for the loss of the caravan failure to take reasonable care of bailed goods
Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd where bailor
delivered motor vehicle to bailee for repair; bailees employees left key in ignition; thieves
broke in through skylight in roof overnight and drove vehicle away; shortly after the break-in,
the defendants installed security bars, an alarm system and signs outside warning of alarms;
held: Defendants liable had failed to take reasonable care
Expiry of term
AGENCY
An agency relationship exists between two parties where one party (the agent) is
authorised by the other party (the principal) to do on behalf of the principal acts which affect
the principals rights and duties with respect to third persons
Fundamental to the concept of agency is authority
STEP ONE: Establish the existence, nature and extent of the agency:
1. Is there an agency relationship as a matter of law?
2. What is the scope of the agents authority?
In particular whether the agent was given authority by the principal to
enter into the particular K at issue or engage in the conduct at issue
P will be liable when the conduct occurs while A is carrying out a task for the
benefit of the P as his or her representative
damage occurring in the transportation of the goods; Vaccine damaged by F; issue whether
F liable for Ps loss; held: actual express authority existed; Alphapharm had authorised RT
to agree upon rates of freight, terms of payment and other standard terms and conditions of a
contract for storage and transportation; terms and conditions of the contract with F signed
by employee of RT were standard (including the exclusion clause) therefore RT via its
employee had acted within the scope of its actual express authority
2.1.2 ACTUAL IMPLIED AUTHORITY?
Incidental authority
Usual authority
Customary authority
by A
Ostensible authority is not actual or real authority at all; does no result from consent
on the part of P (whether express or implied) that A should have authority
As authority is the product of Ps conduct
the law regards A as possessing authority notwithstanding Ps lack of consent
The authority of an agent as it appears to others: Hely-Hutchinson
It is a legal relationship between the principal and contractor created by a
representation made by the principal to the contractor, intended to be and in fact acted upon
by the contractor, that the agent has authority to enter on behalf of the principal into a K of a
kind within the scope of the apparent authority, so as to render the principal liable to
perform any obligations imposed on him by such contract: Freeman & Lockyer v
Buckhurst Park Properties (Mangal) Ltd
Elements:
Representation by P (words or conduct) to Tp that A has Ps authority to do
this act
Reliance on representation by Tp
Alteration of Tps position (detriment) resulting from such reliance
2.2.1 REPRESENTATION?
Element 1: First element, a representation must come from P can
be express or implied
by words or conduct
intentional or negligent
(i) First issue, the manner in which the representation can be made
P may represent A as its agent by:
(a) Acquiescence: Freeman & Lockyer v Buckhurst Park Properties
(Mangal) Ltd where Buckhurst (B), (Principal), established to develop land; 4
directors; Kapoor (Agent) acted as MD (not appointed; acquiesced in K so acting); K
engaged FL firm of architects (Third party - Freeman & Lockyer); issue whether B
had FLs fees; Held: Yes. Silence as regards Ks lack of authority amounted to a
representation by P that A had authority
Self-authorising agent
Not Ps representation, but
(iii) Third issues, where P is a company, who can make a representation on behalf
of co?
2.2.2 RELIANCE?
Second element, reliance
A party with actual authority (eg the board) can confer ostensible authority on
an agent to bind the company
A party with only ostensible authority themselves (eg ordinary director) cannot
confer ostensible authority on an agent to bind the company
Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty
Ltd
The extent of the ostensible authority will depend upon the nature of the
representation made
Outline
Ratification
1. A whose act is sought to be ratified must have purported to act for P when
entering into the transaction
o
2. P must be in existence at the time the act was done and competent at the
time of the contract
3. P must be legally capable of doing the act in question himself (eg make the
contract) both at date of the contract and at the date of ratification
Infants may not be able to ratify acts purporting to be done on their
behalf
Only person who can ratify As act is the person in whose name the act was
expressed to be done (P); however, P may ratify through an A
A must purport to act on behalf of an identified or identifiable person, and
under the authority of that person, before that person can ratify As act
A who ratifies only requires authority to ratify, not authority to have
performed the act ratified: Re Portuguese Consolidated Mines Ltd
o
Act of Ratification
Proof of acts and words showing an election to adopt as his own the act of
another and done by that other for Ps benefit or in Ps name
Proof of ratification
ratification
Basic rule: Where A has made contract with Tp on behalf of disclosed P, who
actually exists and who has authorised A to make such a contract, P can sue and be sued by
Tp on such contract
(one of whose existence the Tp is unaware, so Tp does not know that the person with
whom he is dealing is an A for anybody), and A has actual authority to contact on Ps behalf
If so, undisclosed P can sue and be sued in his or her own name on a contract duly
made on his behalf so long as agent acting within scope of his authority
Undisclosed P in same position as disclosed P
P not liable
If A acting within scope of actual authority, who can sue & be sued?
See Yonge v Toynbee where solicitors acting for a P in defending an action did not
know that their P had become insane. They continued with the litigation, thereby
involving the Tp in costs; when they discovered Ps insanity the solicitors
discontinued the proceedings; held: Since Ps insanity terminated the solicitors
authority they had impliedly warranted that they had authority by continuing the
proceedings when in fact they had no such authority; liable for Tps costs by way of
damages for breach of warranty; As liability does not depend on wrong or omission
by A
Elements
MISLEADING
OR
DECEPTIVE
CONDUCT
THE s 18 PROHIBITION
1.0 A PERSON?
1.1 ACL (Cth) - CORPORATIONS
ACL (Q) allows individuals to be persons: Acts Interpretation Act 1901 (Cth) s 2C
(1); FTA s 19 (1)
CCA, 2A(1): this Act binds the Crown in right of the Commonwealth in so far
as the Crown in right of the Commonwealth carries on a business, either directly or by an
authority of the Commonwealth
If the statute is silent, this suggests that the corporation is not the Crown.
Exemption
2C(1) For the purposes of sections 2A and 2B, the following do not amount to
carrying on a business:
(a) imposing or collecting:
(i) taxes; or
(ii) levies; or
(iii) fees for licences;
(b) granting, refusing to grant, revoking, suspending or varying licences (whether or
not they are subject to conditions
See also
o Dataflow Computer Services v Goodman where misleading representations
by email not in trade or commerce; former employee sought to harm
Dataflows relationship with Harvey Norman and former employee asserted
this was not part of a business
contracted with WSA Online Ltd for design of Australian Cellar Door Website
employee, Houghton, made misleading statements; WSA in liquidation; Arms sued
Houghton
3.0
MISLEADING OR
DECPTIVE CONDUCT?
3.3.1 SILENCE
3.3.3 PREDICTIONS?
Predictions are not misleading merely because matters did not eventuate as the
respondent represented
Something must have been misleading at the time the statement was made e.g.,
Speaker did not believe that what was predicted would eventuate
Prediction may contain an implied representation that Speaker
had reasonable grounds or prediction based on research or knowledge
Expressions of opinion will not be misleading merely because they turn out to be
incorrect; however, they may be misleading if they contain an implied representation that
the speaker holds that opinion, and that there is a reasonable basis for it: Thompson v Ice
Creameries where liable as he held himself out as a leader in the industry (implied
representation: a leader would conduct proper research); and representation that site
would support an ice cream franchise an opinion :implied representation: based
on reasonable grounds but no proper research conducted
A corporation cannot be liable for passing on info supplied by another, if it is not the
source of the information and expressly or impliedly disclaims any belief in its truth or
falsity, merely passing it on for what is worth: Yorke v Lucas
Downey v Carlson Hotels Asia Pacific where Carlson Hotels, previously known as
Raddision Hotels, in the business of running hotels and apartments of high quality;
Raddison Suites, being developed by Valco Developments Pty Ltd; brochure prepared
by Valco to promote the development; name Raddison appeared on the brochure 31
Note that the aggrieved person can recover damages against any
person involved in the contravention: s 236 ACL (Cth)
One can liable as a person involved in the contravention (so once
youve established theres misleading or deceptive conduct already)
if they have
o (a) has aided, abetted, counselled or procured the
contravention
o (b) has induced, whether by threats or promises or otherwise,
the contravention; or
o (c) has been in any way, directly or indirectly, knowingly
concerned in, or part to, the contravention; or
o (d) has conspired with others to effect the contravention
S 4 ACL (Cth)
4.0 REMEDIES?
4.1 CAUSATION?
(a) person (the claimant) makes a claim under subs236(1) of the ACL (Com) and
(d) other person did not intend to cause the loss or damage and did not
fraudulently cause the loss or damage;
the amount of the loss or damage that the claimant may recover under s236(1) of the ACL is
to be reduced to the extent to which a court thinks just and equitable
**If you are bringing a claim in the Cth, you are at a disadvantage because the D can
mount a defence of contributory negligence - there is no equivalent provision in the
States
SALE OF
GOODS:
IMPLIED
TERMS
The rules of the common law, including the law merchant and in
particular the rules relating to the law of principal and agent and the effect
of fraud, misrepresentation, duress or coercion, mistake or other
invalidating cause, save in so far as they are inconsistent with the express
provisions of the Sale of Goods Act, continue to apply to contracts for the
sale of goods. (s 61(2))
In unison with the ACL except where the ACL expresses the contrary
Elements to identify
o Contract of sale
o Goods
o Price
Application
Law of Queensland
Applies to a contracts of sale of goods, defined in s 4(1):
1.2
ELEMENT 2: GOODS
Property mean the general property in goods: s 3
o All chattels personal other than things in action and
money, and also emblements(wheat etc crops) or
industrial crops and things attached to or forming part of the land
which are agreed to be severed before sale or under the contract of
sale: Mills v Stokman ; Amco Enterprises Pty Ltd v Wade
o Symes v Laurie where goods were a whole house being moved
Goods identified and agreed upon at the time a contract of sale is made:
s3
Sale of Goods Act only applies to contracts for the sale of goods.
Apply substance test: Robinson v Graves where commissioned goods
to paint a portrait were not goods, but services: If the substance of the
contract is the production of something to be sold and the exercise of
skill, though high, is primarily for the purpose of producing the
goods, then the contract is one for the sale of goods.
o Re Amlink Technologies Pty Ltd where sale of Software on a CD
Rom Due to its form was goods
Exception: where property passes at the time the contract is made and
the goods are later installed: Aristoc Industries Pty Ltd v RA Wenham
(Builders) Pty Ltd
2.1 S 15?
Section 15 SGA
a) In a contract of sale, unless the circumstances of the contract are such as
to show a different intention, there is:
b) an implied condition ... that in the case of a sale the seller has the
right to sell the goods, and that in the case of an agreement to sell the
seller will have a right to sell the goods at the time when the property is to
pass
c) An implied warranty that the buyer shall have and enjoy quiet
possession of the goods; and
d) An implied warranty that the goods shall be free from any charge or
encumbrance in favour of any third party, not declared or known to the
buyer before or at the time when the contract is made
Seller must have title: Rowland v Divall where breach of Title; sold car
where they had no title, and sued for breach of the condition of title to
sell he had no title so he had breached the implied condition; entitled to
full Refund
Effect of perfecting title: If the title comes about after the sale then it
is passed over and there is no breach: Patten v Thomas Motors Pty
Ltd; Sirius Shipping Corporation v Ship Sunrise
no right to sell even though they have title (eg, trademarks): Niblett
v Confectioners Materials Co where seller had title, and K was for
condensed milk and they subsequently notified seller that sales were
Freedom from physical interference with the goods: Healing (Sales) Pty
ltd v Inglis Electric Pty Ltd
o Cannot claim the goods
o Also Niblett case where K for sale of condensed milk; buyers had
to strip off the labels off the cans before they could assume
possession of goods
Section 16 SGA:
o When there is a contract for the sale of goods by description
there is an implied condition that the goods shall correspond
with the description; and if the sale is by sample, as well as by
description>>, it is not sufficient that the bulk of the goods
corresponds with the sample if the goods do not also correspond
with the description
Exception: Baldry v Marshall: if one has a trade name this is not enough;
must rely on the trade name for purchase not sellers skill and judgement
o Mere fact article sold is described by trade name does not
necessarily make it a sale under a trade name
o When no reliance at all on seller, buyer says she wants article of
particular trade name as she has been told it is suitable for her
purpose then proviso does apply
Trade name Sale = Example: Tre Cavalli Pty Ltd v Berry Rural Co
Operative Society Ltd;
Three
1.
2.
3.
pre-conditions
Goods must be bought by description
From a seller who deals in goods of that description
Buyer has not examined the goods or, if the buyer has examined
the goods, the defects are ones that would not have been revealed
by such examination
Means: fit for the purpose of which those goods are usually sold with
regards to price and other circumstances: Henry Kendall & Sons v
William Lillico & Sons
- A buyer full acquainted with the goods and defects would have
purchased them for the price: Australian Knitting Mills v Grant
Contractual description
Purpose/s for which goods of that description are
commonly purchased
In certain circumstances, price at which goods of that
description are commonly purchased
SALE OF
GOODS:
TRANSFER OF
PERSONAL
PROPERTY
OVERVIEW
Transfer of personal property under a contract of sale
Property, title, ownership and risk
Classification of goods (reminder)
When does property pass
Reservation of property rights
When does risk pass
Title: in some circumstances the SGA confers title (meaning property rights) on an
innocent 3rd party buyer
3(1)
o
But both existing and future are included in the definition of 'contract of
sale' for the purposes of the SGA (s 3 (1) SGA)
Specific: s 3
Identified and agreed on at time of contract
Unascertained
not yet identified or agreed on eg specific quantity of bulk supply of wheat
owned by seller
after date of contract when identified or agreed on become ascertained.
Existing goods can be specific or unascertained at time of making the contract
found
Deliverable state, according to s 3 (4), means they are in such a state that the
buyer under the K would be bound to take them
e.g the seller needed to do certain work before the buyer is bound to take
them, they would not be in a deliverable state
Where there is a contract for the sale of specific goods and the seller is bound
to do something to the goods for the purpose of putting them in a deliverable state:
property does not pass until the thing is done and the buyer has notice of the thing
being done (s21, rule 2).
e.g a seller might be required to do some repairs under the K and only when they are
done and the notification has been given to the buyer that property passes
4.4
Where there is a contract for the sale of specific goods in a deliverable state
but seller is bound to weigh, measure, test, or do some other act or thing with goods for
the purpose of ascertaining the price:
Property passes when the act or thing is done and buyer has notice of that. (s21, rule
3)
e.g buyer has agreed to buy the books on a book shelf at the price of $2 each, the
seller needs to count the books to do something with respect to the goods for the
purpose of ascertaining the price of the K
1. signifies approval/acceptance; or
3. retains goods after time fixed for return or if no fixed time, after reasonable
time
Two scenarios
OR
Then property can pass to dealer when dealer pays wholesaler settled for
or charged or under Rule 4.
Any act that is consistent only with their being the purchaser or
by which they put it out of their power to return the goods: Kirkham v
Attenborough; Genn v Winkel
Has buyer retained goods beyond time expressed or beyond reasonable
time?
o
o
Rule 5(2) If seller delivers goods to buyer, carrier or other bailee for transport
to buyer and does not reserve right of disposal then seller deemed to have
unconditionally appropriated goods to the contract
Must be assent
Wardars (Import & Export) Co Ltd v W Norwood & Sons Ltd where
sale of 600 cartons of frozen ox kidneys; buyers carrier arrived at cold store to
collect at 8AM; goods outside cold store; loading completed at 12PM, but
refrigeration in truck not effective until 1PM; kidneys unfit for human
consumption; court held that property passed at the time of carrier handing over
the delivery note at the cold store; P had property and was liable for price of
goods
o
o
o
s.4(1) SGA: a contract by which the seller agrees to transfer the property in goods to
the buyer for a money consideration called the price
s4(3): when the transfer of the property in the goods is to take place at a future
time or subject to some condition thereafter to be fulfilled the contract is called an agreement
to sell
s4(4) An agreement to sell becomes a sale when the time has elapsed or the conditions
have been fulfilled subject to which the property in the goods is to be transferred
o
Reservation of right of disposal in contract:
Basic form
Buyer may take possession of goods sold
Buyer has until to pay price.
Property in the goods will not pass to buyer until price paid
Risk of loss passes to buyer on delivery.
Further provisions
Goods to be kept separate from buyers other stock so as to be readily
identifiable
Buyer must deposit proceeds of any resale in separate bank a/c
Buyer holds goods and proceeds of any resale on behalf of seller.
Romalpa clauses: These are reservation of title clauses which arise to protect the
seller in the event the buyer becomes insolvent, particularly where property has passed
enables the seller to recover the goods (or proceeds of sale where resold by the buyer) in the
event of the buyers insolvency, thereby preventing the good from becoming part of the
buyers property or assets available for distribution amongst the buyers creditors:
Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd where sellers sold aluminium
foil to buyer; buyer went in liquidation - owed sellers 122,000; receiver was foil with value
of 50,000 and bank a/c with 35,000 being proceeds of on-sale of sellers product kept
separate from other money; sellers claimed charge on this a/c; issue was whether they could
trace and recover the 35,000 proceeds of sale?; court held that romalpa clause was
effective; buyer sold as agent for seller and was accountable for proceeds received; seller did
not have prove that part of that debt in insolvency proceedings
Another example:
o
Supplier or financier provides goods for dealer under a conditional sale
agreement under which dealer agrees to buy goods when can resell to
retail customer
o
There can be a conditional sale/ retention of title
Allied Mills v Gwydir Valley Oilseeds where sale of 130 tonnes of linseed meal in
store at the sellers place of business 4/2/1975; agreed delivery during February; breach seller failed to deliver 100 tonnes; 21 March fire in shed where stored and goods were
destroyed; buyer had resold; had to buy at higher price to fulfil 2nd sale somewhere else
because they could not originally buy the goods from the shed; issue whether property passed
and risk where seller delayed delivery; held that loss was caused by sellers delay; prima
facie rule that risk passes with property did not apply; property passed but risk did not as
loss would not have occurred but for sellers delay
1.
2.
3.
4.
5.
SALE OF
GOODS:
TRANSFER OF
TITLE BY NONOWNER
BASIC SCENARIO
A is owner of goods
B has possession of As goods
B fraudulently sells to C - innocent 3rd party
The legal problem: which of two innocent persons (A and C)
must incur loss caused by fraudulent acts of B?
Nemo dat quod non abet - you cannot transfer what you do not
have
o
Fundamental rule of personal property law - No one can
transfer to another a better title than he/she has
Caveat emptor for buyer
But note the exceptions
1.
2.
3.
4.
EXCEPTIONS TO RULE
s24(1): the buyer is not prohibited from obtaining good title if the
owner is by the owners conduct precluded from denying the
sellers authority to sell
Can be estoppel by representation
Court said that in that case the letter was conduct that amounted
to estoppel - the dealer did get good title in those circumstances
o
o
o
o
o
Mercantile agent
a mercantile agent having in the customary course of
business as such agent authority to buy or sell goods, or to consign
goods for the purposes of sale, or raise money on security of goods
(s2(1) Factors Act)
Examples: motor vehicle dealer, auctioneer
S 25 SGA
When the seller of goods has a voidable title to the goods
but the sellers title has not been avoided at the time of the
sale
the buyer acquires a good title if the buyer buys them in good
faith and without notice of the sellers defect in title
Example:
Owner of goods sells to buyer but sale induced by buyers
fraud, misrepresentation, unconscionable conduct, undue influence
Buyer on-sells to innocent 3rd party
Then owner rescinds voidable sale too late!
s27(1) SGA
Where a person having sold goods
continues or is in possession of the goods
The bona fide purchaser of goods from a seller who has continued in
possession of goods after their sale to the original purchaser will acquire
good title of the goods against the original purchaser: Pacific Motor
Auctions P/L v Motor Credits (Hire Finance) Ltd where motor vehicle
dealer sold cars to finance company (owner) for 90% of price (a
mortgage); after sale, continued to hold them as bailee with authority to
sell them for owner; issue was whether dealer continued in possession
within s 27 (1) so that later sale by dealer to 3rd party passed good title;
held that only continuous physical possession is required;
S 27(2) SGA
Where a person, having (bought or) agreed to buy goods
obtains possession of goods with consent of owner
the delivery or transfer by the buyer of the goods under any
sale or other disposition
to a 3rd party in good faith and without notice of the rights of
the owner
as valid as if buyer was a mercantile agent in possession of
goods with consent of owner
Example
Buyer agrees to buy goods from owner
Buyer has not paid or obtained property rights but is given
possession
Buyer wrongfully on-sells to 3rd party and delivers goods or
documents of title
Buyer does not have to sell in ordinary course of business of
mercantile agent or in any special way
property rights; E sold vehicles to finance coy Natwest for 90% value; E
retained possession of vehicles as bailee but sent Natwest delivery receipt
giving details of vehicles; E then tried to sell vehicles to customers; held
that there was a voluntary transfer of possession to the financiers\
SALE OF
GOODS:
PERFORMANC
E OF THE
CONTRACT
Physical transfer
e.g where the goods are held by a third party, and the
third party acknowledges to the buyer that they hold the
goods on their behalf
RULES OF DELIVERY
Section 31 rules
o
Place of delivery
Timing of delivery
See s14(3)
Section 37
o
When Buyer intimates to Seller that the Buyer has
accepted them
o
When the goods have been delivered to Buyer and the
Buyer does any act in relation to them which is inconsistent
with the ownership of the Seller
o
When after a reasonable time, the Buyer retains the goods
without intimating to the Seller that the Buyer has rejected
them
1.2.2 BUYER'S RIGHT TO EXAMINE
Section 36
o
Where goods have been delivered to the Buyer which he has
not previously examined, he is not deemed to have accepted
them unless and until he has had a reasonable opportunity of
examining them for the purpose of ascertaining whether they
are in conformity with the contract.
o
Issue: what if the buyer does something that amounts to
acceptance under s 37 before they've had a chance to
examine the goods?
o
See below
1.2.3 RELATIONSHIP BETWEEN s 36 and s 37
If the buyer rejects the goods when they are delivered to them, they
have no obligation to return them: s38
s14(3) buyer can lose the right to reject by accepting the goods
where:
o
contract of sale is not severable and the B has accepted
the goods or part thereof, or
o
where the contract is one for specific goods the property in
which has passed to the B,
the breach of any condition to be fulfilled by the S can only be
treated as a breach of warranty
**Hence why when the goods have been accepted is
important
Losing the right to reject by accepting goods
o
Recall s 37
o
Even if they don't have a chance to examine the goods
before accepting them: Hardy v Hillerns & Fowler
Losing the right to reject in the case of specific goods and 14(3)
o
Under s21 rule 1 where contract for specific goods property
passes on completion of the contract
o
Outcome may be seen to be unjust where buyer has had no
opportunity to inspect the goods
o
Courts have applied acceptance test even to specific
goods: Taylor v Combined Buyers
Unpaid seller
o
Defined in s40(1)
Transit period: s 46
Provided property in the goods has not passed to the buyer, the
unpaid seller may withhold delivery of the goods: s41(2)
o
Akin to the right of stoppage in transit when property has
passed
KEY POINTS
Duties of parties
o
Seller (delivery), Buyer (acceptance & payment)
Specific rules around delivery & acceptance
For the buyer, note the different remedies for breach of condition vs
breach of warranty
Circumstances where the buyer has to treat breach of condition as
breach of warranty
Unpaid seller has rights against the goods, and rights against the
buyer
CONSUMER
GUARANTEE
S: GOODS
STEPS TO A QUESTION
Advise on remedies
Determine whether non-compliance with guarantee is a major failure
o Ensure that consumer has rejected the goods (within the rejection period)
in order for refund and has/is going to return them
o Also mention consequential loss if relevant
If relevant, seek remedies against manufacturer provided error is not the fault of
the supplier
o Recover damages and consequential damages
o Mention suppliers right of indemnity against manufacturer if relevant
1.0 CONSUMER?
OBJECTIVE TEST
or
(c) the goods consisted of a vehicle or trailer for use principally in the
transport of goods on public roads
S 3 (1) (a).
S 3 (1) (c) the goods consisted of a vehicle or trailer for use principally in the
transport of goods on public roads
o
o
2.0 GOODS?
o
COMPUTER SOFTWARE: Goldiwood Pty Ltd v ADL (Aust) Pty Ltd where ACL,s
2 computer software expressly included in goods; new releases of software were supply
of goods; fixing software problems were supply of services; different guarantees applied
GOODS IN LAND
ACL, s 8 expressly provides:
o goods are taken to be supplied to a consumer even if they are affixed to land
or premises at the time of supply
o Statute overrides common law
o residential dwelling not goods but where sale includes chattels, such as airconditioners, dishwashers and hot water systems, vendor cannot avoid liability
under ACL consumer guarantees by arguing that the chattels are fixtures and
thus part of the land
o But, must be in trade or commerce; not private sale
ACL, s54(1):
If a person supplies, in trade or commerce, (otherwise than by way of sale by
auction) goods to a consumer, there is a guarantee that the goods supplied are
of acceptable quality
fit for all the purposes for which the goods of that kind are commonly
supplied; and
safe; and
durable
as a reasonable consumer fully acquainted with the state and condition of
the goods, (including any hidden defects of the goods), would regard as
acceptable, having regard to the matters in subsection(3).
o
o
o
o
4.2 ATTRIBUTES
Discuss one or more of the relevant attributes
First attribute: fit for all of the purposes for which goods of that kind are
commonly acquired, repeats the wording of the definition of merchantable quality in
s 66(2) of the TPA.
o
All relevant purposes must first be identified; if goods are not fit for one of
those purposes not of acceptable quality
o
Madsen v Agrison Pty Ltd where second-hand tractor plus slasher for
$24,699; intended use on farm to maintain paddocks; slasher only fit to mow
domestic lawn
Second attribute : acceptable in appearance and finish merchantable quality
component in s 66(2) in Rasell v Cavalier Marketing (Australia) Pty Ltd
o
ACL, s 54(2) makes explicit what was implied in the s 66(2) definition
o
Zhang v United Auctions where kitchen installation granite bench top raised
joint line did not match bench top; jagged as if hand-cut; held not be of acceptable
quality
Fifth attribute: durability - a lot will depend on the price paid for the goods and
the representations made
o
Consumer may choose to buy second hand goods; less durable than new
o
Baratta v TPA Pty Ltd where second-hand Nissan Navara suitable
for towing a horse float and use on farm; $ 27,000; one week after
purchase, over-heating due to cracked cylinder head; held not
durable - even though second-hand vehicle a reasonable
consumer would expect it to last longer than a week after
purchase
s 54(3) sets out specific matters that must be considered in considering each of the
attributes listed in s 54(2).
First: nature of the goods e.g., in relation to the quality of durability it is self-evident
that some types of goods are more durable than others
o
reasonable consumer would expect a major appliance such as a refrigerator to
last longer than a toaster
Burton v Chad One Pty Ltd - court looked at purchase price and durability;
where second-hand 1998 Nissan Patrol purchased 2012 (14 yrs);
purchase price $16,990; 3 months after purchase having driven
3,249 kms broke down; cost of repairs $12,000; held: not
acceptable quality - a major, rather than a minor breakdown - if it
had only cost $1000 to repair it probably would have been
acceptable quality
1.5 EXCEPTIONS
o
o
If:
o
o
o
Exception:
ACL, s 55(3)except where the circumstances show that the consumer does
not rely, or that it is unreasonable for the consumer to rely, on the skill or
judgment of the supplier
Example
Motor vehicle:
ACL, s59: guarantee that any express warranty provided by manufacturer will be
complied with
o
ACL,s 2: express warranty means an undertaking, assertion
or representation that relates to:
the provision of services that are or may at any time be required for
the goods; or
the supply of parts that are or may at any time be required for the
goods
o
o
Rationale
Extends to all representations made by manufacturer in promotional literature
Effect of ACL, s 59: elevates pre-contractual representations by
manufacturer to status of guarantees
Action for misrepresentation at common law transformed into statutory cause
of action
ACL, s 271(5): consumer may by action against manufacturer recover
damages from manufacturer
against supplier:
**Terminology - when you look at the sections, you'll see they're drafted in a way that states
there is a guarantee that the goods will be of acceptable quality - but they're not
prohibitions - so you wouldn't say "a breach of s 54"
ACL, s259(3) provides that if the failure is major or cannot be remedied, the
consumer (not the supplier) has a choice
Consumer may:
keep the goods but ask for compensation to make up the difference in
value caused by the failure.
(a) Goods would not have been acquired by a reasonable consumer fully
acquainted with the nature and extent of the failure;
(b) Goods are significantly different from their description, sample, or
demonstration model;
(c) Goods are substantially unfit for a purpose for which goods of same kind
are commonly supplied;
(d) Goods are not of acceptable quality because they are unsafe
Also see Boyd v Agrison where Agrison: Chinese imported tractor; occupied the
budget end of the tractor market; Agrisons motto: Best quality and Value without
compromise; steering compromised; rendered the tractor unsafe; corrosion; held: not of
acceptable quality; held major failure as tractor significantly departed from demonstration
model shown at Agrisons premises
ACL,s259(2) (a) provides consumer may require the supplier to remedy the
failure within a reasonable time
o
What is reasonable will depend in part on the nature of the goods not settled in law
Thus, a reasonable time to remedy a problem with essential
goods such as hot water systems would be much shorter than discretionary
goods such as a games console
Marwood v Agrison where M purchased new Agrison tractor for $26,000 for use in
vineyard; needed tight turning circle so tractor could go from one row to next at end of row;
mower steering defective; did not allow tractor to turn more than 20 degrees; held: not
major insufficient evidence; may have be possible to rectify by removing air from hydraulic
fluid circuit
Goldiwood Pty Ltd t/a Margaret Franklin & Associates v ADL (Aust) Pty Ltd where
23 May 2013:MFA computer software acquired financial planning; Advisor Logic software
for 12 months $10,000; 9 July 2013: MFA terminated licence and asked for refund; 3 defects
in software supplied: failure to provide email noting system compatible with MFAs system;
failure of software to merge templates; error checking failure; held: at [70] reasonable
consumer would regard it as inevitable that software will have some problems when it
needs to be compatible with software supplied by third parties; no failure to comply with
ACL, s54
TPS Developments v Chefs Hat Australia where TPS operated a restaurant;
purchased commercial dishwasher from Chefs Hat (retail supplier); new but used a display
model; not operated; purchase price $4,900; 5 service calls in 15 months; repairs carried
out by manufacturer at no cost to TPS; held: not major failure; not substantially unfit for
purpose; easily remedied; supplier was entitled to repair and elected to do that by arranging
manufacturer to do so
9.0 REJECTION?
notify the supplier that consumer rejects the goods and advise the supplier
of grounds for rejection : ACL, s263(1); and
return the goods: ACL, s263(2)
ACL, s262(1) provides right to reject goods conferred by s259(3) is lost if:
goods were damaged after being delivered to the consumer for reasons not
related to their state or condition at the time of supply; or
goods have been attached to, or incorporated in, any real or personal property
and they cannot be detached or isolated without damaging them
After the consumer has returned the goods, supplier must act in accordance with election
by consumers
ACL, s263(4) provides that the consumer may choose between:
ACL, s 262(1): consumer not entitled to reject if the rejection period has ended
ACL, s 262(2): rejection period is period from the time of supply to the consumer
within which it would be reasonable to expect the relevant failure to comply with a guarantee
to become apparent having regard to:
Type of goods
**e.g a motor-vehicle with a latent defect might not be discovered by the reasonable
person until after about 12 months or in relation to less complex goods which normally
have a short lifespan a defect would emerge might more quickly
Carrol v Pollock Wholesale where s 262 and 263 applied according to motor car
with worn disc brakes; major failure; applicant rejected vehicle within rejection period
9.3 RETURN?
ACL, s 263:
Consumer must return the goods to the supplier unless the goods cannot be
returned without significant cost to the consumer, in which case supplier must collect the
goods within a reasonable time
o
Carrol v Pollock Wholesale where ss 262 and 263 applied according to motor cat
with worn disc brakes; major failure; applicant failed to return vehicle to respondents
required by s 263
The consumer may, by action against the supplier, recover damages for any
loss or damage suffered by the consumer because of the failure to comply with the
guarantee, if it was reasonably foreseeable that the consumer would suffer such loss or
damage as a result of such a failure
Example: defect in motor vehicle; returned to dealer for repair; consumer
entitled to cost of hiring an alternative vehicle while repairs carried out
Alex Pordage v Chrystal where skope 3 door fridge freezer; $3,000 for
contaminated food
1.
b.
c.
2.
3.
4.
Example:
goods are worth only $10 due to the failure to comply with a
consumer guarantee
manufacturer must pay the consumer $18
ACL, s64 will also render void terms which purport to restrict
the remedies available to consumers following a breach of a consumer
guarantee.
Not possible to exclude liability for:
ACL, s 67: If the proper law of a contract for the supply of goods or
services to a consumer would be the law of any part of Australia but
for a term of the contract that provides otherwise... the provisions of this
Division apply in relation to the supply under the contract despite that
term
CONSUMER
GUARANTEE
S: SERVICES
STEPS TO A QUESTION
Advise on remedies
Determine whether non-compliance with guarantee is a major failure
o Consumer can terminate contract and obtain refund or keep contract and
recover compensation
1.0 CONSUMER?
acquisition of services as a consumer is defined in s3(3) of the ACL:
(a) amount paid for the services did not exceed $40,000, services are
deemed to be consumer services
(b) If amount paid exceeded $40,000, services will be consumer
services only if they are services of a kind ordinarily acquired for personal, domestic
or household use or consumption
2.0 SERVICES?
ACL provisions
s2 of the ACL to include any rights (including rights in relation to, and
interests in, real or personal property), benefits, privileges or facilities that are, or are to
be, provided, granted or conferred in trade or commerce
Contract for construction of fixtures, or contract for building something into
pre-existing fixture will be contract for supply of services
Agency services supplied to a consumer
ACL, s61(4): guarantee as to fitness for a particular purpose does not apply
to the supply of professional services by a qualified architect or engineer
However, other guarantees as to due care and skill, and reasonable time for
supply, apply equally to the supply of professional services by a qualified architect or
engineer
ACL, s 63: excludes services that are, or are to be supplied under a contract of
insurance
Section15(1) Insurance Contracts Act 1984 (Cth):
relief under:
Any other Commonwealth Act;
A State Act; or
An Act or Ordinance of a Territory
ACL, s 60 provides:
Elements
first, the provider of the service must have an acceptable level of skill in the
area of activity covered by the service; and
secondly, the provider must exercise due care in supplying the service
Note term due care rather than reasonable care the common law
standard in cases of negligence
Example
services
A consumer hires a painter to paint her house.
Skill: Before starting the job, the painter does not remove all of the
old, flaking paint. Six months later, the new paint starts to flake. Painter has not
exercised the required level of skill
Cheryl Foster v Mahamudur Rahman (t/a Smarty web Solutions) where interactive
e-commerce site to be developed within 42 days; provision for PayPal; 225 days; image
format problems; held: ACL s 60 failure to comply; respondent did not have requisite skill to
develop the site for which he quoted; held major failure, but kept K and obtained refund for
reduction in value (s 267 (3)); applicant reimbursed 50% reduction in value
While painting the consumer's house, the painter knocks over a can of
paint, which spills over her newly paved driveway. The painter has not met the
guarantee of due care and must fix the damage
TLK Transport v Thornthwaite (T/as Yass Valley Mobile Mechanic where first
breakdown occurred from failure of turbo which sent fins travelling through proximate parts
of engine; scope of work was to get the truck in working order; business struggling without
it; undertook limited repairs; did not inspect or replace camshaft which needed to be
repaired; further repairs necessary within 3 weeks; held failure to comply with s 60 and 61
(1)
Example
driveway
Gates are poorly aligned and make a loud metal scraping noise when
opened
Handyman realigns the gates but in less than two days the problem
returns
Handyman will have to fix the problem free of charge, as the service
did not achieve the desired result
5.3
EXCEPTIONS TO ABOVE
ACL s61(3) provides that the guarantees in s61(1) and (2) do not apply
if the circumstances show that the consumer did not rely on, or that it was
unreasonable for the consumer to rely on the skill or judgment of the supplier.
ACL, s61(4) provides that the guarantee as to fitness for a particular purpose
does not apply to the supply of professional services by a qualified architect or engineer
there is a guarantee that the services will be supplied within a reasonable time
time period that is reasonable will vary significantly depending on the nature
of the services to be provided
reasonable time to repair a hot water system (essential service) will be shorter
than repairing a television set (non-essential service)
not possible to set out in the ACL what is reasonable and the courts and
tribunals will need to consider all the circumstances that apply to a particular case to
determine the time period that is reasonable
Basic question is: does the consumer have to pay the price if the work of the
service provider is unsatisfactory?
ACL classifies failures into those that are major and those that are not major
ACL, s268: A failure to comply with a guarantee that applies to a supply of services is
a major failure if:
Remedies available
are unfit for a particular purpose for which the services were
acquired by the consumer that was made known to the supplier of the services; and
the services, and any of those products, cannot, easily and within a
reasonable time, be remedied to make them fit for such a purpose (fitness for
purpose);
E.g., a consumer tells a pay TV company they want to watch football final.
Consumer signs contract but football final over before the company installs
the service
ACL, s 268 (d): the services, and any product resulting from the
services, are not of such a nature, or quality, state or condition, that they might
reasonably be expected to achieve a result desired by the consumer that was made
known to the supplier; and
the services, and any of those products, cannot, easily and within a
reasonable time, be remedied to achieve such a result
ACL, s 268 (c), unlike ACL, s 268(b), it is not necessary to prove that the services
are substantially unfit for the special purpose made know to the supplier.
If the particular needs of the consumer are made known to the supplier, there is a
major failure if the services supplied are not fit to meet those needs without the requirement
that they must be substantially unfit to meet those needs
ACL, s 267(3) provides that if the failure is major or cannot be remedied, the
consumer (not the supplier) has a choice. The consumer may:
terminate the contract for the supply of services; and obtain a refund; or
keep the contract and recover compensation from the supplier to make up
any reduction in value of the services caused by the failure
Yan Tun Wu v Great Wall Travel Service where failure to visit scheduled travel sites
in New York including Museum of Modern Art, United Nations, Rockefeller Centre and Times
Square; held: Failure to comply with ACL, s 60 ACL, s 236 remedy in damages
Consumer must give the supplier who provided the service the opportunity to fix the
problem at no cost to the consumer
ACL, s267(2) provides if the failure to comply with a guarantee can be remedied and
is not a major failure,: (a) the consumer may require the supplier to remedy the failure
within a reasonable time
Right provided for in s 267(2)(b)(i) to have the failure remedied by a third party
predicated on the consumer first giving the supplier the opportunity to fix the problem
Gives the supplier the opportunity to determine whether the failure due to abnormal
use by the consumer
ACL, s267(2)(b) provides if the supplier refuses, or fails to remedy the failure within
a reasonable time, the consumer has two choices:
have the failure remedied by a third party and recover the costs from the
first supplier; or
terminate the contract for the supply of services and refuse to pay for the
services supplied
ACL, s 267(4) provides that the consumer may bring an action against the supplier
to recover damages for any loss or damage suffered by the consumer because of the failure
to comply with the guarantee, including losses that were reasonably foreseeable as a result
of the failure
Weir v Geelong Grammar School w h e r e i m pli e d t er m s u n d er of d u e c are
a n d s kill a n d fit n e s s for p ur p o s e u n d er t h e for m er Fair Tra din g
Ac t 1 9 9 9( Vic); a c tio n for bre a c h of c o n trac t b y s u p pl yin g ina d e q u a t e
SECURITY
INTERESTS
S 19
o (1) A s e c u rity int er e s t will b e e nforc e a bl e a g ai n s t a g r a n t or in
r e s p e c t of a p a r tic ul ar c olla t e r al o nly if
o (2) A s e c u rity int er e s t is a t t a c h e d t o t h e c olla t e r al w h e n:
(a) the grantor has rights in the collateral, or the
power to transfer rights in the collateral to the
secured party; and
(b) either
(i) value is given for the security interest; or
(ii) grantor does an act by which the security
interest arises
S 20
o (1) S e c urity int er e s t e nforc e a bl e a g ai n s t Tp in r e s p e c t of
p a r tic ul ar c olla t e r al o nly if
( a) s e c u rity int er e s t a t t a c h e d t o c olla t e r al ( fulfilled
O n e of t h e followin g a p pli e s
(i) s e c ur e d p a r t y p o s s e s s e s c olla t e r al
(ii) s e c ur e d p a r t y h a s p e rf e c t e d s e c urity int er e s t
(iii) a s e c u rity a g r e e m e n t t h a t pr ovid e s for t h e
s e c urity int er e s t c ov e r s t h e c olla t e r al in
o Gr a n t or h a s sig n e d or int e n tio n ally a d o p t e d
a writt e n s e c u rity a gr e e m e n t wit h a d e q u a t e
d e s crip tio n of c olla t e r al
4.0 PERFECTION?
S 21
o (1) S e c urity int er e s t in p a r tic ul ar c olla t e r al p e rf e c t e d if
(b)
S e c urity int er e s t is a t t a c h e d t o c olla t e r al (fulfilled
S e c urity int er e s t is e nforc e a bl e a g ai n s t Tp
(fulfilled above)
(2)
D e t er mi n e w h e t h e r a n o t h e r p a r t y c a n t ak e t h e pr o p e r t y fr e e of t h e
s e c urity int er e s t: s s 4 3 4 6
S 43
o (1) Buy e r or le s s e e of p e r s o n al pro p e r t y, for v alu e , t ak e s
p e r s o n al pro p e r t y fre e of a n u n p e rf e c t e d s e c u rity int er e s t in
Exception: (2) Th e a b o v e d o e s n o t a p ply if u n p e rf e c t e d
s e c urity int er e s t w a s cr e a t e d or provid e d for b y a
tr a n s a c tio n t o w hic h t h e b u y e r or le s s e e is a p a r t y,
u nl e s s t h e p e r s o n al pro p e r t y c o n c er n e d is of a kin d
i.e Where there is no registered security interest the
person who bought it takes the goods free, and the
creditor can still trace the proceeds of the sale; if they
are bankrupt s 267 of the Bankruptcy Act means that
the money is lost.
S 44
o (1) Buy e r or le s s e e of p e r s o n al pro p e r t y t ak e s t h e p e r s o n al
pro p e r t y fre e of a s e c urity int er e s t in t h e pr o p e r t y if
( a) r e g ul a tio n s pr ovid e t h a t p e r s o n al pr o p e r t y of t h a t
kin d m a y, or m u s t, b e d e s crib e d b y s e ri al n u m b e r in a
(b) s e a r c hin g t h e r e gis t e r, im m e di a t ely b efor e t h e ti m e
of t h e s al e or le a s e , b y r ef er e n c e o nly t o t h e s e ri al
n u m b e r of t h e pr o p e r t y, w o uld n o t dis clos e a
i.e where a search on serial number does not find
the goods, unless the buyer takes the goods as
inventory for a business where ABN has been
allocated
S 45
o (1) Buy e r of le s s e e , for v alu e , of a m o t o r v e hicl e of a kin d
pr e s crib e d b y t h e r e g ul a tio n s for p u r p o s e of t his s e c tio n, t ak e s
t h e m o t or v e hicl e fre e of a s e c u rity int er e s t in t h e m o t or
( a) t h e r e g ul a tio n s pr ovid e t h a t m o t or v e hicl e s of t h a t
kin d m a y, or m u s t, b e d e s crib e d b y s e ri al n u m b e r; a n d
(b) t h er e is a ti m e d u rin g t h e p e rio d b e t w e e n t h e s t a r t of
t h e pr e g vio u s d a y a n d ti m e of t h e s al e or le a s e b y
r ef er e n c e t o w hic h a s e a r c h of t h e r e gis t e r (b e r ef er e n c e
o t h e r wis e o nly t o t h e s e ri al n u m b e r of t h e m o t or
v e hicl e) w o uld n o t dis clos e a r e gis tr a tio n t h a t p e rf e c tr e d
(c) t h e s ell er or le s s or is:
(i) t h e p e r s o n w h o gr a n t e d t h e s e c urity int er e s t; or
(ii) if t h e p e r s o n w h o g r a n t e d it h a s los t t h e rig h t
t o p o s s e s s t h e m o t or v e hicl e, or is e s t o p p e d fro m
a s s e r tin g a n int er e s t in it a n o t h e r p e r s o n w h o is
S 46
o
(1) A buyer or lessee of personal property takes the personal property free of a
security interest given by the seller or lessor, or that arises under section 32 (proceeds
attachment), if the personal property was sold or leased in the ordinary course of
the sellers or lessors business of selling or leasing personal property of that kind.
(2) Subsection (1) does not apply if:
(a) in a case in which personal property of that kind may, or must, be
described by serial numberthe buyer or lessee holds the personal property:
(i) as inventory or;
(ii) on behalf of a person who would hold the collateral as
inventory; or
(b) in any casethe buyer or lessee buys or leases the personal property
with actual knowledge that the sale or lease constitutes a breach of the
security agreement that provides for the security interest.
S 47
o
(1) A buyer or lessee of personal property, for new value, that the buyer or lessee
intends (at the time of purchase or lease) to use predominantly for personal,
domestic or household purposes takes the personal property free of a security
interest in the property if the market value (worked out at the time each part of the
total new value is given) of the total new value given for the personal property is not
more than:
(a) $5,000; or
(b) if a greater amount has been prescribed by regulations for the purposes of
this subsectionthat amount.
S 4 9: A p e r s o n w h o b u y s a n inv e s t m e n t ins tr u m e n t or a n
int er m e di a t e d s e c u rity in t h e or din a r y c o ur s e of tr a din g o n a
pr e s crib e d fin a n ci al m a rk e t (wit hin t h e m e a ni n g of t h e Corporatio n s
Ac t 2 0 0 1 ) t ak e s t h e ins tr u m e n t or int er m e di a t e d s e c urity fre e of a
]
Grantor Remedies can
o Seize s 123
o Claim any unpaid purchase price s 53
o Resell s 128
Note Authorised dealer cl 21